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While in Nicaragua, I ran into Rick Peyser of Green Mountain Coffee Roasters, who is also on the board of the Specialty Coffee Association of America, Coffee Kids, and the Fair Trade Labeling Organizations (quite a triple crown!).
I read an article in The Economist recently which criticized Fair Trade as a simple price support system that encourages overproduction. This “Adam Smith” take on Fair Trade implies that the invisible hand of economics should be allowed to force down prices and remove the small “inefficient” producers, all in the best interest of society. Indeed as Smith said in the Wealth of Nations:
We recently got an updated study from the National Coffee Association indicating that Fair Trade consumer awareness is up for the third straight year. The study also indicated that over half of consumers who know of Fair Trade coffee buy it. In fact, Fair Trade is twice as likely to motivate a purchase as organic. Our own research tells us the main reason is that Fair Trade represents equitable trading conditions for small farmers, an issue that most consumers care about.